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The City watchdog, the Financial Services Authority, is investigating claims by a whistleblower that Britain's £300bn wholesale gas market has been "regularly" manipulated by some of the big power companies, exploiting weaknesses that echo the recent Libor scandal.

Separately, the energy regulator Ofgem has been warned by a company responsible for setting so-called benchmark prices, ICIS Heren, that it had seen evidence of suspect trading on 28 September, a key date as it marks the end of the gas financial year and can have an important influence on future prices.

The whistleblower, who works for ICIS Heren, raised the alarm after identifying what he believed to be attempts to distort the prices reported by the company. These benchmark prices are critically important because many wholesale gas contracts are based on them and small changes in the price can cost or save companies millions.

The revelations come at a highly charged time for Britain's energy sector, with many of the big six suppliers under public fire for alleged profiteering on household energy bills and mis-selling on the doorstep.

In a statement, the FSA said: "We can confirm that we have received information in relation to the physical gas market. We take market misconduct seriously and will be analyzing the material."

Ofgem said it had been given material "relating to trading in the gas market and is looking into the issue". The energy regulator said it had limited powers in this area but would "consider carefully any evidence of market abuse brought to our attention as well as scope for action under all our other powers".

The City and energy regulators are keenly aware of the growing political concerns that high energy prices, which are linked to wholesale values, can increase fuel poverty and undermine economic recovery.

The market abuse concerns were initially raised by Seth Freedman, a former City trader who worked as a price reporter at ICIS Heren for nine months. He told the Guardian he believed problems he spotted in a frenzied half-hour of trading on 28 September were more widespread.

"Traders have made clear to me that manipulation of gas prices is taking place on a regular basis. They name big companies among those they accuse of trying to rig prices and reap profits. Market participants claim the fixing of prices is an open secret," he said.

He also claimed that:

Big six companies are among those whose names are quoted by traders as being involved in attempts to raise or depress wholesale gas prices.

The key benchmark indices produced by at least one price reporting agency and used increasingly in massive UK supply contracts are unreliable, undermined by poorly trained staff and over-cozy relationships between traders and price reporters.

Price reporters struggle to set accurate benchmarks because they lack detailed information about trading in the opaque so-called "over-the-counter" market and are dependent on what traders tell them about market activity.

The disturbing issues raised by the traders he talked to daily in his job at ICIS led Freedman to tape conversations about the 28 September price gyrations, which he has handed over to the FSA.

In one, a trader from one power company says: "There's a feeling among some people that somebody's taking the piss a bit on the day ahead index. Between us I think [Company X] got in a bit of trouble for that about six months ago." (It has not been possible to establish if any company was censured.)

Another trader told Freedman, who has previously been a freelance contributor to the Guardian, in an instant messaging exchange: "There are a few shops that continually try to distort closes from what I see … some of the range of quotes I hear sometimes are criminal."

When Freedman flagged up a series of suspiciously low trades that he believed were designed to depress ICIS's "day ahead" price on 28 September, a senior ICIS manager acknowledged that they appeared to be an attempt to manipulate the price but said "actually we did a bad job investigating it".

ICIS Heren did notify Ofgem about the suspicious trades. But, in another recorded conversation, the manager said there was "no official thing to do" when price reporting agencies saw what they believed to be evidence of price manipulation.

The whistleblower's information handed over to the FSA shows that on 28 September the price at which so-called day ahead gas contracts were being bought and sold dropped sharply at precisely the time – 4.30pm – at which ICIS Heren attempts to take the pulse of the market.

One explanation for this could be that traders were deliberately dealing below the prevailing price in order to drag the benchmark down, perhaps because they stood to gain more from other contracts linked to this benchmark.

It is not possible for price reporters to establish who did the suspicious deals because they were conducted through a third-party brokerage firm.

In a statement, ICIS confirmed that it had detected some "unusual trading" activity on the British wholesale gas market on 28 September, which it reported to energy regulator Ofgem in October.

"The cause of the trading pattern, which involved a series of deals done below the prevailing market trend, has not yet been established. ICIS welcomes the seriousness with which the regulator has so far responded to this information and we have provided all the evidence at our disposal to help the regulator determine what happened."

ICIS said it welcomed the additional powers that are to be assigned to national energy regulators as of 2013 under the Remit regulation and the additional market oversight provided by the pan-European energy regulator ACER.

A spokesman for the Department of Energy and Climate Change said: "The government takes alleged abuse in our markets very seriously. It's important not to pre-empt the work that the enforcement agencies already have under way to assess the detail of the allegations made. The FSA and Ofgem have a range of powers available to them and have our full support in applying the law and ensuring that any wrongdoers are held to account."

It is understood that the energy and climate change secretary, Ed Davey, will make a statement to the House of Commons on Tuesday about the price manipulation allegations.

In Europe, energy companies have been trying to fight off attempts by Brussels to introduce tighter regulations of the gas market to ensure there can be no repeat of the Libor scandal.

Arlene McCarthy, the North West England MEP, said she feared Freedman had unearthed another case of apparent market abuse and manipulation in gas prices.

"For some time I have feared there is an extensive cartel culture of market-rigging and price-fixing in the commodities markets. Companies guilty of abuse must face the full force of penalties and sanctions and jail for criminal behavior," she said.

"The FSA must take action but as the UK gas is the benchmark for gas traded at EU level I will be asking European commissioners [Joaquín] Almunia and [Michel] Barnier to take urgent action on cartels and price-fixing and introduce tough rules on the setting of benchmarks and indices in the commodities markets."

Chris Cook, a former compliance officer at the International Petroleum Exchange and now a senior research fellow at University College, London, said the problems highlighted by Freedman in the gas market echoed those in the oil sector.

"There is a structural issue here that over-the-counter markets with low liquidity can be manipulated by traders putting through visible trades at a duff price. We need to make sure the market is more transparent through a transaction registry," Cook said.

The way energy prices, which are used for key benchmarks in much larger multibillion-pound supply contracts, are formulated has been under recent scrutiny from the G20 group of leading global economies.

The price reporting agencies' (PRAs) work in the oil markets was scrutinized by an organization working for the G20 nations amid widespread concern about oil trader speculation. There is no suggestion that ICIS or any other PRA has been involved in speculation themselves, but there are fears their reporting could be distorted by misleading information provided by energy traders, or by anomalously priced trades designed to move the benchmark price.

A report published last month by the board of the International Organization of Securities Commissions (IOSCO) talks about the "opacity and variations" in PRA assessment methodologies.

"The need for assessors to use judgment under methodologies creates an opportunity for the submitter of data deliberately to bias a PRA's assessment in order to benefit the submitter's derivatives position," it says, adding: "For example, a trader seeking to manipulate a price might attempt to influence the personnel responsible for assessment."

The French oil group Total said in a letter to the IOSCO: "Sometimes the criteria imposed by PRAs do not assure an accurate representation of the market and consequently deform the real price levels paid at every level of the price chain, including by the consumer."

Meanwhile, energy companies have been working hard to fight off any new initiatives from Brussels about the way gas prices are set.

A European gas hub report just published by ICIS says: "The recent London interbank offered rate (Libor) scandal engulfing major financial institutions also prompted a European commission consultation in early September on the regulation of key indices, including those for coal, natural gas and electricity. However, strong industry resistance to many of the proposals has so far resulted in the watering down of many elements of the current regulatory proposals."

In the past, because there were relatively few "spot" short-term contracts to give ideas about current prices, these British and other European longer-term import deals with the Norwegians or the Russians were tied to prevailing oil prices. But increasingly major long-term and high-volume contracts have been linked to spot prices set by ICIS and other agencies.

Although some deals with corporate customers are specifically linked to benchmark prices such as ICIS Heren's, industry experts say it is difficult to assess what impact wholesale manipulation – if it were going on – would have on household bills.

EDF and SSE, two of the big six, contacted by the Guardian, denied that they would be involved in any attempt to manipulate prices or be involved in other bad practice. Two others, E.ON and RWE, have made similar statements in the past.

A spokesman for the French-based energy group said: "EDF Energy does not participate in loss-leading trading activity and considers it to be against existing market regulation. We make information likely to impact market price formation publicly available on our website in compliance with the European Union's regulation on energy market integrity and transparency (Remit)."

SSE said: "We are entirely confident that our energy portfolio management team operate in a fair and legitimate way."

A spokesman for Centrica, which owns British Gas, said: "Our compliance procedures and trading principles are clear. They require us to comply with all European Union and UK laws and we have done so." Scottish Power, another big six company did not comment.

The political temperature over domestic energy bills is likely to hot up again when a British Gas price rise of 6% for gas and electricity comes into effect on Friday. The average household bill for a dual-fuel British Gas customer will go up from £1,260 to £1,336 a year, according to the energy account transfer service uSwitch.

Ann Robinson, director of consumer policy at uSwitch.com, said: "The timing could not be worse – as winter makes its presence known, the cost of heating our homes will be taking its toll on cash-strapped consumers. With bills reaching an all-time high, it's no surprise that almost nine in 10 households will be rationing their energy usage this winter."

McCarthy, the MEP, said any upheaval in the wholesale markets was dangerous because domestic supply companies cited the rise in wholesale prices as a reason for household prices to increase. "If in the end wholesale prices are being manipulated to increase the profits of the energy companies then consumers will end up the victim of this great gas ripoff. Families have seen gas and energy prices rise on average by between six and 9% this year, adding on average £200 to their bills."

Freedman has worked as an FSA-approved trader in the City and contributed to the Guardian from Israel. He was not working for the Guardian while employed as a price reporter by ICIS Heren.